Rowan Jones

National Accounting, Government Budgeting and the Accounting Discipline

National accounting and government budgeting include two kinds of financial reporting that are not influenced by, but have an increasing influence on, the accounting discipline. The government budget has changed, over the last sixty years, from a financial statement that was recognisably part of the accounting discipline to one in which national accounting and government budgeting have the dominant influence. There were early attempts to reconcile national accounting and the discipline but these have largely disappeared. Although the three forms of accounting measure the same phenomena, each is different in fundamental ways, in terms of both relevance and reliability.

The diversity of accrual policies in local government financial reporting: an examination of infrastructure, art and heritage assets in Germany, Italy and the UK

This paper examines the norms and practices for infrastructure, art and heritage assets in six cities, across three European countries, to determine how the national norms of accrual accounting compared with each other, and with IPSAS, and how the practices in each city compared with the norms. We identify significant diversity between actual practices and the norms imposed by national policy‐makers or set by IPSAS. Given that a longstanding concern of the literature has been on whether these kinds of assets should be included in governmental balance sheets and operating statements at all, it is striking how often the question was settled in practice by excluding art and heritage assets, even when this meant non‐compliance with national norms. In our three countries, it is clear that comparability of the financial statements between countries was not a concern of policy‐makers, and comparability between cities within each country not a concern of preparers.

A Comparison of Budgeting and Accounting Reforms in the National Governments of France, Germany, the UK and the US

This paper compares technical aspects of accrual-based budgeting and accounting reforms of the national governments of France, Germany, the UK and the US. It shows that there is no consensus among the four countries about the complete package of technical reform possibilities that is most appropriate; there is also no consensus among the four countries about each one of the possibilities that is most appropriate. What is clear is the resilience of traditional budgetary accounting systems. It is also clear that, in the fundamental context and content of the reforms, the UK is the striking exception.

The Federal Government of Germany's circumspection concerning accrual budgeting and accounting

In 2010, the German federal government, renowned for its fiscal rectitude, abandoned its accrual-based budgeting and accounting reform, certainly the output-based budgeting component of it and possibly the rest. While the German federal ministry of finance supported the reform, parliamentarians feared that the change from an input to an output orientation to the budget, together with the reduction of the number of individual appropriations, would result in a loss of their control over the budget and the governments finances. The global banking crisis certainly increased, and may well have triggered, these fears.

Investigating the audit fee structure of local authorities in England and Wales

Abstract The purpose of this paper is to model and test the audit fee structure of local authorities in England and Wales, with particular interest in fees charged by the Big 4 and other private sector auditors. The Audit Commission, a national public body under Parliament, regulates local government audits in England and Wales. The Audit Commission sets audit standards, appoints the auditors, and establishes a formula to determine standard audit fees. Constrained by the standard audit fees, each local authority and its auditor negotiate the actual audit fees. The majority of audits are conducted by district auditors (public sector employees under the Audit Commission), although about 25% of local authorities are audited by one of six private auditors (including three of the Big 4). Regression results for financial year 2000/01 have high explanatory power and work well to explain fee differences. Model relationships are somewhat different from US counterparts (which is the context of most of the audit economics literature) and type of authority partially explains fee differences. OLS regression results indicate a Big 4 discount for local authority audits. Because of expected self-selection bias, the Heckman procedure is used to analyse the differences between private sector and public sector auditors, which indicates no selection bias for Big 4 firms, although bias is present for private firms as a whole and district auditors in some models. When fees are size-adjusted, results continue to show a Big 4 discount. The Big 4 discount was robust to other follow-up tests.

Public Versus Private: The Empty Definitions of National Accounting

The policy-making processes and the policies of the two international systems of national accounts are addressed, from the perspective of the accounting discipline. The particular measurement issue that determines which parts of an economy are public and which are private - the reporting entity - is discussed. The main conclusion is that the definition of the reporting entities is so vague as to be empty; in other words, national accountings definition of what is public and what is private is empty.

The Conceptual Framework of Resource Accounting

This article explains the underlying principles of resource accounting in UK central government and some of the theoretical and practical complications involved in meeting the requirement that it should be based on company accounting. The author argues that the principles of resource accounting are very different from those underlying company accounting, and that accounting for the effects of changes in the general level of prices might be being stifled only because there is no parallel in company accounting. The implication is that competition will arise between resource accounting and company accounting for dominance.

EPSAS—Worrying the Wrong End of the Stick?

The ultimate objective of the European Public Sector Accounting Standards (EPSAS) project is for the European Union (EU) to improve budgetary surveillance of its member states through more reliable statistics. The objective of this article is to analyze the EPSAS decision and discuss the efficacy of the proposed solution. Harmonization is already present through national accounting rules; will more standardization do the trick? Is the problem really being dealt with, or is it just an attempt by the EU to appear to be doing the right thing while the real issue is ignored? This article suggests that targeting governmental accounting systems for this purpose may prove futile.

Governmental budgeting as ex ante financial accounting: The United Kingdom case

Abstract For many years now the academic governmental-budgeting literature has concentrated almost exclusively on the politics and economics of the budgetary process at the expense of the mechanical foundations. Consequently, we see an interesting but insulated discussion about political involvement and about the strengths and weaknesses of planning models. What we do not see is a discussion of the accounting perspective. This paper offers such a discussion. It explains local government budgeting as “ex ante financial accounting” and offers some important implications of this re-interpretation.

Public Sector Accounting and Auditing in the United Kingdom

The Treasury dominates budgeting and accounting for the revenues, expenses, assets, liabilities and cash flows of central government. Its powers and responsibilities for central government money extend to the economy as a whole, covering fiscal and monetary policy for the UK’s currency (although the operational responsibility for this is with the central bank). The political heads of the Treasury are the Prime Minister and the Chancellor of the Exchequer.